Game over for American Express card gamers?

March 10, 2017

Card gamers and churners under fire by American Express (Photo: Chris McGinnis)

As the credit card wars heat up between American Express Platinum and the Chase Sapphire Reserve card – an AmEx official said this week that his company will weed out new customers who might not be with it for the long haul.

Known in the industry as “gamers” or “churners,” these are individuals who sign up for a credit card only to get the big bonuses or short-term incentives that are often offered to new customers. After signing up and getting the bonus, these “hobbyists” quit and move on to the next card with the newer, better sign up bonus.

Chase has already implemented a new 5/24 rule forbidding people from getting more than five Chase cards in a 24-month period– even those with excellent credit ratings.

This week AmEx Global Consumer Services President Doug Buckminster said at a conference in New York that the company is developing ways to “suppress” gaming in favor of seeking out and keeping loyal cardholders,according to Bloomberg.

He said the company will “use our analytics and technology to surgically remove gaming and reinvest in higher-quality, more loyal new customers.”

$10 off your first Lyft ride!

Buckminster did not explain how the company would be able to distinguish between “gamers” and more steadfast customers who sign up for a new card. He did concede that the growing list of benefits offered by AmEx and Chase to new Platinum and Reserve cards currently constitutes a form of ”hand-to-hand combat” in the credit card industry – one that shows no signs of easing up.

Also at the conference, AmEx CEO Ken Chenault said: “What will be interesting to see not just with Chase but with other competitors is what happens when the short-term incentives are dried up …”

Hmmm. Does that mean that Amex is considering pulling back on generous sign up bonuses? Then how will it find new card members? Or get back those it’s lost to the Chase Sapphire Reserve card?

Related

Sadly, it doesn’t cover NEXUS program which not only is cheaper than Global Entry, but it includes Global Entry and TSA Pre.

Lori Tatarsky

I have had my AMEX Plat for 12 years, and am still a loyal cardholder. I take advantage of 1) the Fine hotel & resorts program often enough that those savings alone cover my membership fee, 2) use the Delta and Centurion Clubs, 3) Global entry includes TSA pre (fantastic perk), 4) access to a professional AMEX travel counselor 24/7 when traveling (perfect for my solo travel ventures), 5) cruise upgrade perks when cruising, 6) $200.00 airline credit (covers snack & food purchases in club and on plane) or cancellation fees. Loving my existing AMEX perks, and looking forward to using UBER and getting 5x points on airline purchases.

RichLL

I maintain that there are some out there who abuse the incentives, which will either lead to those individuals being blackballed or the incentives scaled back. I hope it’s the former and this change is an indicator of that.

Scuba Bubbles

A marketing progam involves attracting and retaining customers, and maximizing the net revenue stream from them. If a program is not as effective as HOPED in retaining customers, nor as effective as HOPED in maximizing the net revenue stream, the fault is with the program.

To imply that customers who exit the system once the promotion is satisfied is “gaming” is disingenuous at best, and professional misconduct at worst.

When an airline offers a fare sale, for example, during a particular period, it can HOPE that passengers attracted by the low fares will continue to travel in future when fares are higher…but if some/many/all passengers do not, the travelers cannot be blamed for not continuing their patronage of the airline when the fares are higher (especially relative to what other airlines might be offering at that time).

How would we feel if the airlines announced a policy that passengers who do not buy a higher-priced ticket within 3 months of purchasing a sale fare will no longer be allowed to travel due to them “gaming” the system?

The design of a program—a good program—is expected to take into account all reasonable consequences (and the probablility of what consitutes ‘reasonableness’ varies with the industry).

This issue is not about credit cards nor travel; it is about a fundamental principle of marketing.

RichLL

Yes, it wouldn’t surprise me if part of your credit score is some kind of grade that indicates whether you are a serial churner and gamer. There is no reason why banks shouldn’t deter or even block those who do this too much.

RichLL

I don’t really agree. The offers are designed for reasonable people who don’t just trade in and out. It’s like the difference between long-term investor and day traders, and the latter usually do worse.

RichLL

It’s the law of unintended consequences. You make an offer with a minimum, and then people bail as soon as they reach that minimum. Their only mistake was not realizing how willing some people are to game the system and ruin it for the rest of us.

JD

It’s not abuse. Have a card with a good sign-on bonus and good continual bonuses (Chase SWA Rapid Reward comes to mind). But blaming people and calling them “abusers” is absurd. Smart consumer may be a better term. But credit cards and big banks love to blame others.

Kirk

Hang on now. The article doesn’t say how many loyal, profitable customers were attracted by the program. It’s possible the program was enormously successful at attracting profitable customers, way more successful than any program you’ve ever designed. But, along with that, it attracted a few undesirables so they are tweaking it.

Scuba Bubbles

If a company devises a marketing program to attract new customers, but is dissatisfied with the “kinds” of customers attracted, the fault lies with whoever designed the program. If the program is over-broad in pre-approving prospective customers, that’s the program manager’s fault. If the program is too lenient about approving the “wrong” customers once they apply, that’s the program manager’s fault.

As a product marketing professional, I hold myself accountable for the outcomes — intended or otherwise — of the marketing programs I design and deploy.

I don’t read anything about the “gamers” committing fraud. Is AmEx alleging such?

Chris, would you please ask your contacts at AmEx why they seem to be ignorant of fundamental economic theory and basic marketing program management? Would appreciate follow-up.

RichLL

Perhaps it is sites like this which are encouraging churning and flipping, and thereby killing the goose that pays the golden eggs?

As much as I like sign-on bonuses, I think it’s irresponsible to swap cards as soon as you get the bonus, which can take as little as a month.

So yes, Amex is right to crack down on the serial abusers

Mark

Funny musings @ Amex …
Got the Sapphire Reserve some time ago,
have all other Chase Cards, plus the new Ink Biz Pref.
… Amex targeted me with a 100K points offer 2 years ago.
Took it, closed the card after 10 months, said I can’t use it because I’m with United Air Lines.
Well, guess what … After recently getting the Sapphire Reserve I get the next targeted 100K points offer from Amex for a Biz Plat, plus a 75K targeted offer for an Amex Gold biz …….. that’s crazy!
They are losing upwards of 2 Grand on me …

Betty Cranston

I’ll sign up with a card for the bonus, but I’ll only keep it for the benefits. Right now I have three Chase fee cards, but at the end of the year I’ll decide which one I’ll be keeping, depending on how the benefits might change in coming months. I’ve never found AmEx very useful the way I live- awful for foreign travel the way I do it, and not that easy to use here at home.

clarelouise44

I think you mis-stated Chase’s policy on credit cards. It’s any 5 credit cards within the previous two years. They don’t have to be Chase cards.

Drew Bergman

As long as I can keep all my Amex cards for free it won’t make a huge difference in the long run. I’m almost out of cards I can bonus on anyway.

This is all interesting however AMEX had never been all that kind to regular users that are just trying to earn points. They are slow to award the points, they do everything they can to not give points. MR points from different cards aren’t equal, etc. etc.

This is also further proof that the golden age of the points and miles game may have been about 5 years ago. As technology slowly catches up it is getting easier for airlines to shut down or avoid error fares, credit card companies to shut down churners, shutting down shopping portal promotions like the latest BA Match.com deal. Not to mention how airlines and hotels are getting better technology to try to award less points or miles for specific customers, locations, etc. We can only hope that competition keeps prices in check. These companies have lost a lot of battles to “The Points/Miles Game” but they are slowly winning the war long term.

Editorial Disclaimer: This editorial content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program. Responses in the comments section are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.”